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Monday, February 3, 2014

Treasury to Offer Retirement Option

The U.S. Treasury will develop the myRA (“my Retirement Account”), offering a new retirement savings account in late 2014. The retirement savings account will be a Roth IRA account and have the same rules and tax treatment. There will be no fees and the account can be opened for a minimum of $25 through payroll direct deposit. Backed by the U.S. Department of the Treasury, the account balance of myRA will never go down and will earn interest at the same rate as the Government Securities Investment Fund in the Thrift Savings Plan for federal employees.

Initially, employers can, but are not obligated to, offer myRA information to their employees who will, once it is available, be able to enroll in the account with a minimum initial contribution of $25 and as little as $5 directly deposited from each paycheck. Like a Roth IRA account, the annual income eligibility limit is $129,000 for individuals and $191,000 for couples.

The account will not be limited to one employer; account holders can carry the plan from one employers to another and savers with multiple jobs can use direct deposit from each paycheck to contribute to a single myRA. Contributions to myRA can be withdrawn tax free at any time and earnings will be tax free unless withdrawn before the saver is 59½. Account holders can build on the account for 30 years or until the account reaches $15,000, whichever comes first. After that, the myRA balance will roll over to private-sector retirement accounts.

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